Oil price up again on Saudi fears

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    28 February 2011
    Last updated at 03:45 ET

    Oil prices have risen 2% on fears unrest in the Middle East might spread, including to top producer Saudi Arabia.

    Brent crude reached $114.50 in early trading, before receding, while US light, sweet crude hit $99.50.

    Libyan oil output is down an estimated 75% due to the revolt, but Saudi Arabia has promised to meet the shortfall.

    However, on Sunday, the Saudi stock market fell 5% after 119 academics, activists and businessmen wrote an open letter to the king demanding reform.

    The Tadawul all-share index has fallen a cumulative 10% in the last two weeks to its lowest level in six months, prompting some Saudi investors to call on the government to intervene to steady the market, or even to close it.

    The news comes as the Egyptian stock exchange is set to reopen on Tuesday after a month-long closure due to the popular uprising there, although protestors continued to gather outside the stock exchange building intent of forcing another delay.

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    By 0830 GMT, Brent crude was up $1.42 at 113.56, while US light, sweet crude was $1.12 higher at $99.03.

    Saudi ‘day of rage’

    The letter to the Saudi king complained about the prevalence of corruption and nepotism and a widening gap between state and society.

    Meanwhile a Facebook site calling for a “day of rage” in Saudi Arabia on 11 March has seen its number of subscribers increase from 400 to 12,000 in recent days.

    Analysts fear the kingdom may face the same volatile generational schism that has affected Egypt and elsewhere.

    Two-thirds of the Saudi population is aged under 30.

    Youth unemployment is about three times the national average and there is an 18-year waiting list for government-provided housing.

    The threat of protests has already wrung concessions from the 87-year-old King Abdullah, who only recently returned from three months of medical treatment in the US.

    He has offered permanent work contracts to an estimated 50,000 state workers, and spent $36bn (£22.3bn; 26.1bn euros) of the country’s $440bn in currency reserves on social initiatives, including a 15% pay rise for public sector employees.

    Swing producer

    Saudi Arabia plays a critical role in global oil supplies.

    Not only is it the world’s biggest producer, with the world’s largest reserves by far, but the country is also a key “swing producer” within the Organisation of Petroleum Exporting Countries (Opec), retaining most of the world’s spare production capacity.

    The kingdom accounts for the bulk of Opec’s additional 4.7 million barrels-per-day available, compared with Libya’s exports estimated at 1.5 million.

    Meanwhile violence flared on Sunday for the first time in non-Opec Oman – which produces about 865,000 barrels-per-day – as police cracked down on pro-democracy demonstrations there.

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    Oil price up again on Saudi fears